Entrepreneur, Founder/creator of mobile app BeerLamp (beerlamp.com), Completed ZX Ventures Accelerator in NYC, Darden MBA, Johns Hopkins MA
The SEC rules concerning equity crowdfunding goes in to effect on May 16, 2016. They recently released 685 pages of guidance. These rules allow anyone with an idea to try to raise money for their startup. There are several pros and cons to these new rules. I'm here to help you make sense of it all.
From October 2013 to present, I led the design, development and launch of the mobile app BeerLamp. We made mistakes and also had successes. I'm here to help you avoid the pitfalls of mobile apps, develop your concept and create a realistic go-to-market strategy
My first startup was funded through various sources including SBA loans along with friends and family. My following startups are funded through bootstrapping, grants and joint ventures. I have experience pitching angel investors, VCs, incubators and accelerators.
I've been running a startup in the alcohol industry for the past 2 years. It's a difficult market. Shelves are full of brands competiting for space. You'll need to have something that really differentiates yourself from more established players. You'll probably have more success with a small, startup distributor. I know the owner of Altamar Brands. He already carries Tequila Ocho, but he might be open to other brands or know distributors looking.
Let me know if I can help in any way or you'd like to find a time to chat.
You might want to check out their request for startups. See if your company fits in any of those areas.
https://www.ycombinator.com/rfs/
Pricing anything is a little bit of science and art. It really depends on what you are selling. You'll be looking at cost plus or value pricing. If you're selling goods in a highly competitive market, you're stuck with pricing to beat competitors and product differentiation. If you're selling a service or you're lucky to have little competition, you could price based on the value your customer receives.
Any pricing strategy will have to start with an understanding of the market. If you'd like, we can find a time to talk and discuss your product and market.
The freemium model is the latest trend in SaaS. People are hesitant to pay for services when there are so many platforms offering free platforms. Either a free level with basic functions or a trial period of your software will lead to more onboarding and allow you to up-sell services.
My experience with online communities is mixed. Those work best if you have a value proposition that appeals to a large mass for a short period of time - i.e. a game.
For something like healthcare I'd imagine you are looking to have people engage regularly and for an extended period of time. That is going to take more time to convince people to use your platform.
You should be looking for your core user. If you developed personas and user stories, you can use those to identify groups to start with and expand from there. A beta test with a few hundred core users is better than 1000s of users that don't fit your model. If you didn't develop personas or user stories, I'd recommend taking time to go back and think through those. Either way, I'd be happy to help you get started.
Best, Brian
I think the KISS principle should rule here. It's easy to get wrapped up in the future success of your startup and the precautions you should take now to protect yourself. I'd suggest not overcomplicating it and focus on other things that are more important.
Also, investors want to see you have skin in the game. I would expect to see a cash injection into the company. A note would lead me to believe that you are expecting the company to fail and you want to be in line before equity investors to get repaid in the event of liquidation. It'd be a red flag for me.
If you take on investors, there is a good chance they'll change the company structure anyway. If you have any questions, let me know and we can find a time to talk.
Early on, I often thought the same thing - once you're ready to invest, I won't need you. In hindsight, I think that's a narrow view.
You have to look at it from their perspective. Investors aren't looking to put money into an exploration project. They are interested in putting money into a business that will use it to grow more quickly than they otherwise could have. If you grew 300% last year, could you have achieved 500% with additional capital, a more robust marketing campaign or through adding employees?
Also, just because a concept works well at a small stage, doesn't mean it will be successful as it scales up. Growth slows, customer acquisition becomes harder and a company's culture changes. Those are all risk factors for investors. Bootstrapping is great, but you should consider bringing on investors if they can provide capital as well as guidance, connections to clients or other valuable intangibles that will take your company to the $10M+ mark.
I've been down that road with my recent app build. Even with a good test, there is no guarantee that the final version will be successful. There are over 1.5 MILLION apps in the App Store. That is a lot of noise to cut through.
The idea of outsourcing the original build is good and there are several freelance sites you can use to get started. We went that route and hired a freelancer out of Vietnam. While the prototype worked, it was a painful process. Be prepared for language barriers, translation issues and other problems.
I can help you get started and guide you through development. Let me know if you'd like to find a time to talk.
I am assume you're talking about equity crowdfunding. There are several sites available now for accredited investors, which would be looking for a higher return than you are probably expecting.
After May 16th this type of investing will become available to the general public. The SEC just opened up the window for new websites to register as "intermediaries" so you'll see a lot more coming on line between now and May. Given the description of your business idea, I'd suggest using one of these and trying to attract investors looking to invest in small businesses that are seeking acquisitions.
The SEC guidance is complex (about 685 pages). I would be happy to walk you through it and help you find a site that will work well for you.
If you have steady positive cash flows, expect them to value you based on a discounted cash flow with an expected terminal value. Typically a 5 year model is a good starting point. The good news is that those include a lot of assumptions, specifically around growth rates for revenue and expenses.
If you'd like to talk through common valuation techniques and get an idea of your company's worth, let me know. We can find a time to meet.
A convertible note is a possible route. It would provide the owner with a discount to the price set at your next round of funding. For example, assume you give the note holder a 50% discount on your next round. Then your Seed Round sets the price at $10 per share/unit, the note owner would be able to convert their $50,000 for 10,000 shares ($5 per share). You'd have to negotiate more specifics such as interest payments, term length and any assets used as collateral in the event that you end up in bankruptcy.
Feel free to reach out with any questions or to set a time to talk.
